Hale's pay cut by 10%

With 1st Mariner's $14.9 million 4Q loss, top executives 'absorb some of the pain'

April 09, 2009|By Andrea K. Walker | Andrea K. Walker,andrea.walker@baltsun.com

Several executives at 1st Mariner Bancorp, including Chairman and CEO Edwin F. Hale Sr., took pay cuts of as much as 10 percent last year as the financial company suffered significant losses from bad loans.

Hale, who started 1st Mariner in 1995, earned a base salary of $522,000 last year, compared with $580,000 the year before, according to a regulatory filing with the Securities and Exchange Commission.

The company's chief operating officer and the executive vice president and chief financial officer also reported 10 percent pay reductions, while another executive vice president took a 3 percent pay cut.

The pay reductions come as the company's banking arm, 1st Mariner Bank, has continued to suffer from soured real estate loans and is operating under an informal supervisory agreement with federal regulators.

The company posted a $14.9 million fourth-quarter loss.

"We thought it was appropriate for the senior management to absorb some of the pain," said Executive Vice President Dennis Finnegan, who also took a pay cut.

"When times are good, it's appropriate for people to get paid for that. When times are not so good, we have to be willing to take some of the responsibility."

Finnegan said other high-level employees had also taken pay cuts.

1st Mariner has taken other steps in recent weeks to deal with its financial situation, including deferring interest payments on $73.7 million in debt issued by seven trust subsidiaries as a way to preserve capital. The company also gave the banking arm an infusion of $16.1 million to offset losses.

1st Mariner, with $1.28 billion in assets, is set to become the largest bank based in the Baltimore area when M&T Bancorp completes its pending acquisition of Provident Bankshares.

1st Mariner is among a number of public companies in the area whose executives have agreed to pay reductions as their companies failed to meet financial goals.

Under Armour chief executive Kevin Plank voluntarily cut his salary from $500,000 to $26,000 last year after the Baltimore-based sports apparel company he founded did not meet revenue goals.

1st Mariner also disclosed that at its annual meeting on May 5, shareholders will vote on a proposal to split Hale's job, with the chairman elected by the board.

John F. Mass, a shareholder from Charlotte, N.C., who owns 3,796.4 shares, plans to present the proposal. Separating the two positions allows for more accountability and oversight, Mass said in the regulatory filing.

Mass did not return calls yesterday. He has submitted the same proposal for the past six years, but each year it has been defeated. Last year, however, it received 42.5 percent of the votes cast.

1st Mariner's board is recommending that shareholders vote against the proposal because they said the 14-member board provides enough oversight.

"I don't think it's a conflict," Finnegan said. "Adding ... senior management at a time when the company is controlling expenses makes it particularly inappropriate."

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